Equity Funds Bounce Back Strongly in October, Morningstar Canada Data Show
November 02 2011 - 7:00AM
PR Newswire (Canada)
TORONTO, Nov. 2, 2011 /CNW/ - After five consecutive months of
negative returns, equity funds in Canada produced strong gains in
October as general optimism seemed to return—albeit temporarily—to
the world's stock markets. All but one of the 22 Morningstar Canada
Fund Indices that track equity categories had positive returns for
the month, with 14 of them gaining 5% or more, according to
preliminary performance data released today by Morningstar Canada.
"Equity markets had one of their biggest months in years, with the
S&P/TSX Composite Index up over 5% and the S&P 500 up
nearly 11%. This was due to positive growth numbers at home, and
hopes that eurozone leaders had created a workable solution to the
Greek debt crisis," said Morningstar Fund Analyst Adam Fisch.
"However, the month ended on a sour note, as a selloff on Oct. 31
was followed by the surprising announcement of a Greek referendum
on the proposed bailout. That news, accompanied by disappointing
Chinese manufacturing numbers, sent stocks downward and cast doubts
over the prospect of sustained recovery in the equity market."
Foreign markets for the most part outperformed their Canadian
counterpart during the month, but for Canadian fund investors these
solid performances were tempered by currency effects, with the
Canadian dollar appreciating by more than 4 % against the U.S.
dollar and many Asian currencies. As a result, the returns of the
Morningstar Canada Fund Indices that measure foreign equity
categories were much lower than the corresponding market benchmarks
when expressed in local currency. Among the major diversified
foreign equity categories, the Morningstar U.S. Small/Mid Cap
Equity Fund Index had the best return with 9%, while the indices
that measure the Emerging Markets Equity, Greater China Equity and
U.S. Equity categories gained 8.1%, 8.1% and 7.3%, respectively.
The International Equity and Global Equity fund indices both gained
5.4% in October. The worst performer, and the only Morningstar
Canada equity fund index to lose ground last month was Japanese
Equity, which lost 4.1% despite positive results on Japanese stock
markets; this was due to the yen's depreciation of 5.6% against the
loonie. The best-performing fund index overall was Natural
Resources Equity, which gained 11.3%. "As fears subsided throughout
the month, oil and precious metals rose on hopes of higher demand,
buoyed by optimism in Europe. Production of oil in OPEC countries
and in the United States rose in the month to keep up with
anticipated increased demand, but the prospect of further
instability in Europe could derail those plans and give back many
of the month's gains," Fisch said. Among Canadian equity funds,
those that focus on smaller companies edged out the large-cap
offerings. The Morningstar Canadian Small/Mid Cap Equity and
Canadian Focused Small/Mid Cap Equity fund indices gained 7.1% and
6.4%, respectively, while the Canadian Focused Equity and Canadian
Equity fund indices were up 5.7% and 5.6%, respectively. For more
on October fund performance, go to www.morningstar.ca. Morningstar
Canada's preliminary fund performance figures are based on change
in funds' net asset values per share during the month, and do not
necessarily include end-of-month income distributions. Final
performance figures will be published on www.morningstar.ca next
week. About Morningstar Morningstar Research Inc. is a Canadian
subsidiary of Chicago-based Morningstar, Inc., a leading provider
of independent investment research in North America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on approximately 330,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 5 million equities,
indexes, futures, options, commodities, and precious metals, in
addition to foreign exchange and Treasury markets. Morningstar also
offers investment management services and has more than $167
billion in assets under advisement and management as of Sept. 30,
2011. The company has operations in 26 countries. Morningstar
Research Inc. CONTACT: Adam Fisch, Fund Analyst, Morningstar
Canada, (416) 484-7815;ChristianCharest, Editor, Morningstar
Canada, (416) 484-7817
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